Direct Line in talks to sell international operations

Direct Line shares rose more than 3% to 294p

(Reuters)

Direct Line has announced it is in talks to sell its international operations as it increased profits during the first half of the year, despite bad winter weather.

The insurer, which was spun out of Royal Bank of Scotland in 2012, said it is considering offloading its Italian and German operations after conducting a strategic review, but would not say how advanced the talks were.

The combined business took in £328 million in premiums during the six months ending June 30.

“While the review confirmed the international division’s strong market positions and the potential of the direct channel to grow in these markets, the group decided to explore a potential disposal of these operations,” boss Paul Geddes said.

“Discussions are taking place with a number of parties, but at this stage there is no certainty that a disposal will occur,” the chief executive added.

The company saw its operating profits fall by 13.1 per cent to £249.1 million during the period after being hit by £80 million in bad weather-related claims at the start of the year.

However, at the pre-tax level, profits were up 7.8 per cent to £225.1 million because of fewer one-off costs.

Its shares rose more than 3 per cent to 294p as the company raised its dividend 4.8% to 4.4p and paid a special dividend of 10p.